The Reserve Bank of India (RBI) has decided to introduce an ombudsman for non-banking finance companies (NBFCs) similar to one for the banking sector. The central bank thinks it will provide the customers a cost-free and speedy grievance redressal mechanism.

The scheme will cover all deposit taking NBFCs and also those NBFCs with customer interface having asset-size of Rs 100 crore and above. To begin with, the scheme will become operational by the end of this month for all deposit taking NBFCs, RBI said.

The RBI had earlier made it mandatory for all the NBFCs to have a grievance redressal officer. The name and contact details have to be mandatorily displayed in the premises of the NBFCs. This officer takes care of the grievances of the customer within the organisation.

But if the customer is not satisfied by the settlement, he will have to approach the nearest RBI office and the complaint cell in the office is supposed to hear the grievance.

RBI probably thinks that as the NBFCs have grown in size in the recent past, it is time they should have a redressal mechanism of their own.

The industry finds this is a recognition of NBFCs for their role played in the financial eco system. “I find it as a positive development for NBFCs. NBFCs have grown in size and matured to play a significant role in the financial ecosystem. By providing the NBFC customer the facilities for grievance redressal similar to a bank customer, RBI is recognising our role," said P. Sridharan, executive director of Shriram Transport Finance.

According to him, an ombudsman for NBFCs will make redressal of complaints faster and within specific timeline and this indeed will increase the confidence of the customer while dealing with an NBFC, especially when he is depositing his money or pledging his valuables.

KR Bijimon, CGM, Muthoot Group finds that complaints have been reported against some deposit taking institutions and Nidhi companies in the past. "Probably RBI feels there should be a separate ombudsman to tackle these issues faster," he said.